US growth reaches 2.5%, but may be unsustainable

The US economy grew by 2.5 percent from April through June, the Commerce Department has said. While the second-quarter result was an improvement on the 1.1% growth in the first quarter, how sustainable the growth will be remains a big question.

The Q2 GDP figures come at a sensitive time for
the US government as it contemplates the future of its massive
stimulus program, as well as the debt ceiling. How sustainable
growth is now plays a key part in decision-making. Last week, the
Federal Reserve shocked markets at its September meeting, when it
decided to keep its monthly stimulus at $85 billion. The Fed
said then it wasn’t sure the US economy was strong enough to do
with reduced monetary support.

Lately, the US has been showing some signs of recovery, with the
housing market gaining momentum and unemployment sticking at 7.3
percent – the lowest since 2008.“We think the US
economy is on a recovery track, and see it expanding 1.8 percent
this year,” Yaroslav Lissovolik, chief economist at Deutsche
Bank, told RT.

However, another market analyst, Igor Nikolaev, director of the
strategic analysis department at PKF, told RT that the growth
wasn’t sustainable. With inflation still running below the Fed’s
2 percent target, and the national debt skyrocketing to $16.9
trillion, the US needs to come to terms with its reckless
spending habits.

“The US economy is like a sick patient with a rash, and it’s
still unhealthy,” Nikolaev said.